Immunodeficient animals are generated by introducing a mutation in RAG-1 into the germline of the animals via gene targeting in embryonic stem cells. The production of mutant RAG-1 deficient mice is detailed. RAG-1 deficient mice have no mature B and T lymphocytes. The arrest of B and T cell differentiation occurs at an early stage and correlates with the inability to perform V(D)J recombination. To date, these mice do not have mature B and T lymphocytes, nor do they express immunoglobulin or T cell receptors. The same strategy can be applied to the generation of other RAG-1 deficient animals, such as rabbits, rats, and pigs, using known techniques. These animals are all useful for the same general purposes as the scid mice, for example, cultivation of human lymphocytes for expression of human immunoglobulin. Other uses include the establishment of continuous lymphoid cell lines and, by crossbreeding with other lines of animals, the establishment of animals developing tumors for use in studying tumor cell developments and treatments.